As the crunch summit chaired by Prime Minister Gordon Brown and Irish Premier Brian Cowen enters its third day, the fate of the Stormont Assembly hinges on whether the main parties in the region can find an agreed way forward on the thorny parades issue.

The talks at Hillsborough Castle, Co Down, were dramatically convened by the two premiers on Monday after the long running row between the Democratic Unionists and Sinn Fein over the stalled devolution of policing powers escalated to crisis point.

Republicans threatened serious consequences for the administration if the DUP does not agree to a swift transfer of law and order responsibilities from Westminster, but the main unionist party insisted it will not give the go ahead until there is progress on the parades front.

The party is demanding an end to the Parades Commission which currently oversees marches in flashpoint areas such as the Garvaghy Road in Portadown, Co Armagh, one of a number of loyal order parades which had previously sparked violence.

Led by the two premiers, all of Northern Ireland's main parties were involved in round the clock talks to hammer out a solution.

It is understood an agreement could unlock the possibility of a devolution date before the forthcoming general election.

On Tuesday night all the political leaders met face to face during a round table meeting chaired by Mr Brown and Mr Cowen.

Afterwards SDLP leader Mark Durkan said progress had been made on the issue of parades and called for a deal that would promote true partnership in the coalition government, in which his party holds one ministry. "There were a lot of positive words said around the table, a lot of good words," he said.

Both Northern Ireland Secretary of State Shaun Woodward and Irish Foreign Affairs Minister Micheal Martin broke off from talks momentarily on Tuesday night to express confidence that progress could be made.